India's forex reserves jump $9bn to nearly $616bn
What's the story
India's foreign reserves jumped by $9.11 billion, hitting $615.97 billion for the week ending December 15, according to the Reserve Bank of India (RBI). This increase comes on the heels of a previous growth of $2.82 billion to $606.86 billion during the week ending on December 8. The primary reason for this surge is an expansion of $8.35 billion in foreign currency assets (FCAs), which are impacted by the value changes of non-US currencies like the euro, pound, and yen.
Details
Breakdown of the forex reserves components
The RBI's Weekly Statistical Supplement provided a breakdown of the various factors contributing to the forex reserves' growth. Gold reserves rose by $446 million, reaching a total of $47.58 billion. Special Drawing Rights (SDRs) grew by $135 million, amounting to $18.32 billion. Furthermore, India's reserve position in the International Monetary Fund (IMF) increased by $181 million, hitting $5.02 billion.
Insights
India's forex reserves reached an all-time high in October 2021
It's important to note that in October 2021, India's forex reserves reached an all-time high of $645 billion. However, since then, the reserves have been dropping as the central bank uses them to support the rupee amid pressures mainly caused by global events. The RBI, from time to time, intervenes in the market by selling US dollars to manage liquidity, aiming to prevent sharp drops in the rupee's value.